The Recommendation
Target benefit
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per month
60% OF INCOME
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Your numbers
Elimination period analysis
The elimination period is how long you wait, post-disability, before benefits start. Longer wait = lower premium but more savings burned. We match it to your emergency-savings runway.
Benefit period analysis
How long benefits pay if you remain disabled. "To 65" is the practitioner standard — matches the SSA disability transition to retirement benefits. Shorter periods (2-yr, 5-yr) only cover the short-tail and leave you exposed to permanent disability, which is the catastrophic scenario LTD exists for.
Own-occupation vs any-occupation
Own-occupation (recommended)
Benefits pay if you cannot perform the duties of your specific occupation, even if you can earn income in a different field.
- Surgeon develops hand tremor — can no longer operate. Becomes a medical consultant earning $200K. LTD still pays because they can't do surgery.
- Most expensive but most protective definition.
- Often only available for higher profession classes (1A-3A).
- True "own-occ" extends to retirement; some policies revert to "any-occ" after 2-5 years.
Any-occupation (cheaper, limited)
Benefits pay only if you cannot perform any occupation for which you are reasonably qualified by education, training, and experience.
- Same surgeon — can work as a consultant — no LTD payment. Definition met when "reasonably qualified by training" earns less than 60-80% of pre-disability income.
- 30-40% cheaper than true own-occ.
- SSDI uses an "any-occ" definition, which is why SSDI is so hard to qualify for.
- The practitioner answer: pay for own-occ if you can get it, especially in specialized professions.
SSDI — the public-safety-net gap
Social Security Disability Insurance exists, but it's a thin floor, not a coverage. Why private LTD is the conversation:
Employer-group LTD vs individual LTD — the practitioner tradeoff
Employer-group LTD
- Pro: No medical underwriting, often automatic enrollment, employer subsidizes premium.
- Pro: Cheap relative to individual policies.
- Con: Benefit usually taxable (employer pays premium).
- Con: NOT portable in most states — you lose coverage when you change jobs.
- Con: Definition usually "any-occ" after 2-5 years.
- Con: Group plans frequently capped at $8-15K/mo, leaving high earners exposed above the cap.
Individual (portable) LTD
- Pro: Portable across jobs — you own it.
- Pro: Benefit tax-free (you pay premium with after-tax dollars).
- Pro: True own-occ available to retirement.
- Pro: Stack on top of employer group up to industry-standard "issue and participation" limits.
- Con: Full medical underwriting; pre-existing conditions can be excluded.
- Con: 2-4× the premium of employer-group equivalents.
Practitioner stack: take the employer-group plan (it's free or near-free), then add an individual policy on top to (a) bring total replacement to 60-70% of after-tax income, (b) lock in own-occ to retirement, and (c) protect against job-change loss of coverage. This is the standard high-income-professional setup.
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Methodology & caveats
Why 60-70% of income — the cap and the tax wrinkle ›
LTD policies cap replacement at 60-70% of pre-disability income. Why not 100%? Because insurance underwriters do not want to create a financial incentive to remain disabled. If LTD paid 100% of income, claims duration would be materially longer (this is well documented in actuarial data).
The 60% number is for taxable benefits (employer-paid premium). On after-tax basis: 60% gross × (1 − ~25% effective rate) = ~45% of pre-tax income, which lands at roughly 60% of take-home pay. So a 60% gross taxable benefit replaces about 60% of net take-home.
If you pay your own premium (after-tax), the benefit is tax-free. 60% gross tax-free ≈ 80% of take-home. This is why the Institute defaults to recommending individual policies stacked on employer coverage: the after-tax math is dramatically better.
Elimination periods and the savings-runway math ›
The elimination period (waiting period) is functionally a deductible. Common options:
- 30 days: Most expensive. Needed only if you have <1 month of savings.
- 60 days: Modestly cheaper. Common for short-term disability bridge.
- 90 days: Industry default. Matches typical short-term disability (STD) coverage handoff.
- 180 days: 15-20% cheaper than 90-day. Need 6+ months of savings.
- 365 days: 25-30% cheaper than 90-day. Need 12+ months of savings. Best for HNW with strong cash position.
The Institute default for white-collar professionals: 90-day elimination if you have 3-6 months of savings; 180-day if you have 6-12 months; 365-day if you have 12+ months.
Benefit periods — why short periods are a trap ›
2-year and 5-year benefit periods are cheap and almost worthless. The whole point of LTD is to insure against the catastrophic case — permanent disability lasting decades. Short benefit periods cover only the recovery tail of acute conditions and leave you exposed to the actual risk.
Council for Disability Awareness data: of disabilities lasting 90+ days, the median duration is roughly 31 months. The right-tail (chronic illness, MS, ALS, severe accident) easily exceeds 5 years and often runs to retirement.
Practitioner answer: benefit period to 65 (or 67) is the only defensible choice for primary LTD. Use short-term-disability (STD) for the short-tail recovery cases.
SSDI — why it's not enough ›
Social Security Disability Insurance (SSDI) exists. It's not adequate. The numbers:
- Approval rate: 35-40% of first-time applications approved. 60-65% are denied. Most denials require appeal hearings that take 12-24 months.
- Median benefit (2025): ~$1,580/month for an approved single worker. The maximum is ~$3,800/month.
- Definition: "Any substantial gainful activity" — the strictest definition in the insurance industry. A surgeon with hand tremor who can do consulting work for $20K/year may be denied SSDI because they can do "any" work.
- Waiting period: 5-month elimination (no benefits in months 1-5 of disability), then a 24-month wait before Medicare eligibility kicks in.
The high-earning-professional gap: SSDI replaces maybe 20-30% of income for a $200K-earner, and only if approved. Private LTD has to fill the rest.
The hidden tax wrinkle and why "60% coverage" usually isn't ›
The single most important LTD planning concept — and the one most often missed: who pays the premium determines whether the benefit is taxable.
If your employer pays the LTD premium and does not include it in your W-2 income, the benefit is fully taxable as ordinary income. Your "60% of salary" group LTD actually replaces ~40-45% of take-home pay.
If you pay the premium yourself with after-tax dollars (even if the policy goes through your employer's group rate), the benefit is fully tax-free. Now your 60% gross benefit replaces ~80% of take-home.
Workaround for high earners: ask HR if you can "tax up" the LTD premium — have the premium added to your W-2 income as imputed compensation. You pay tax on a few hundred dollars of premium now, and you get a tax-free benefit forever if you need it. Most modern employer plans allow this election. Always elect it.
Disclosure. Not investment, tax, or insurance advice. We are not your advisor. This tool produces an educational planning estimate. Premium estimates are rough industry-average indicative ranges as of early 2026; actual quotes vary by carrier, state, profession class, medical history, and underwriting cycle. SSDI statistics from the SSA Annual Statistical Report; CDA disability incidence data from the Council for Disability Awareness 2024 Long-Term Disability Claims Review. Always obtain quotes from 3+ independent agents and have a fiduciary insurance consultant review policy definitions, especially "own-occupation" and "residual disability" language, before purchasing. The Baratelli Institute does not sell insurance products and does not earn commissions on any referral.